Domestic Consumption of Dairy is Down!

In the prior post the decrease in milk production was covered.  Is there enough milk to cover current demand?  At the end of that post a review of domestic consumption was promised.  Here it is!  Yes, domestic consumption of dairy is down.  This post will cover domestic consumption of fluid milk, cheese, and butter, the big three.  Domestic consumption is down in 2022 for all three.

FLUID MILK

Fluid milk has been in a decline for some time (Chart I).  During the COVID lockdown, sales first surged and then fell.  By March of 2023, the rate of decline was at 2.1% year-over-year, the same rate of decline as in March of 2018.  Prices of fluid milk did increase with inflation, but fluid milk sales have proved to be a product that is not price sensitive and is a must buy even at higher prices.  The price increases of fluid milk were covered in this prior post.

Chart I - U.S. Milk Sales

Table I shows where the major drops in fluid milk sales are.  One percent fat milk has declined by 28% over five years. Fat free milk has declined by 45%.  See this prior post for more specifics.  There will come a time when fat free milk is not available in all stores as the sales are minimal.

Table I - Change in Fluid Milk Sales by Butterfat Content

The conclusion for fluid milk is that it is continuing its decline with a consistent downward trend of about 2% annually.  This is a continuation of a long-term trend.  Within that trend, over five years conventional milk lost 11% while organic milk grew by 10%.  Organic milk sales by weight are 7% of total milk.  By sales price, organic milk makes up a bigger percent as they are priced higher than conventional milk.

CHEESE    

Cheese is the largest use of U.S. milk and has a long-term trend of growth.  Charts II and III below show the annual change in pounds consumed, and the percent of changes from one year to another.  Domestic cheese consumption grew consistently from the year 2000 to 2019, a twenty-year run.  In 2020 and 2021 with COVID stay at home policies in place followed by significant inflation, growth leveled off.  In 2022, domestic cheese consumption fell by 2% compared to the prior year.  Cheese domestic disappearance from wholesale inventories also fell in 2022 supporting the fact than domestic cheese consumption was decreasing.

Cheese production (Chart IV) has shown steady growth, but wholesale inventories (Chart V) are stable.  How is this possible?  Cheese exports increased in 2021 and 2022.  Cheese domestic growth has stopped, but increased exports have allowed production to continue to increase.

Many European countries have domestic per capita cheese consumption much higher than the U.S., so domestic growth is still possible as inflation subsides.

Chart II - Cheese Consumption

Chart III - Percent Change in Consumption of Cheese

Chart IV - Cheese Production

Chart V - Wholesale Cheese Inventory 

BUTTER

Butter consumption was down in 2022 (Charts VI and VII) as reported by Statista.  The 2022 decline in domestic butter consumption was near to 7%.  The decrease in consumption is consistent with the USDA data for disappearance from wholesale inventories in 2022 which were also down.

Production of butter was down in 2022 (Chart VIII) to sync with domestic consumption.  Exports of butter did make up for some of the lose in domestic consumption, but butter exports are minimal.

Chart VI - U.S. Butter Consumption

Chart VII - Percent Change in Consumption of Cheese

Chart VIII - Butter Production

Chart IX - Butter Wholesale Inventory

WHAT DOES IT ALL MEAN?

The decline in domestic consumption of fluid milk, cheese, and butter portrays a negative trend for U.S. dairy.  Will inflation come down and will domestic consumption pick up?  Can export markets increase to keep the U.S. dairy industry growing?  There is a lot of uncertainty in future projections.  As new data becomes available, it will be analyzed here. 

To answer the question in the previous post to this blog, the lower U.S. milk production is probably adequate for now with falling domestic consumption.